Afore SURA weighs funding new mandates in Mexico

Afore SURA, the first Mexican pension manager to invest in international mutual funds, is now considering funding a new mandate, according to Andres Moreno, the firm’s CIO.

In an interview with Fund Pro Latin America, Moreno shared that “once mutual funds became available, having a mandate seemed too expensive.”

As a result, in late 2020, the firm closed the mandates they already had.

Now, given the current environment and after the pension reform will effectively slash fees in the sector and grow assets under management, “we are looking to having new mandates,” he said.

The manager has always been open to using mandates again. Back when it decided to close mandates and open funds, Moreno mentioned that it “does not always have to be the case. If what is best suited to our investment strategy is to do it through mandates, we will do so.”

For him, the decision between mandates and mutual funds has a lot to do with costs and benefits for its clients. Considering this, it made sense to favor mutual funds over mandates. Now, he believes the current environment allows for a decrease in the cost for these vehicles and expects to see this reflected in new proposals.

So far, the firm has investments in 10 international mutual funds, from managers such as Morgan Stanley AM, Ninety One (formerly Investec), JP Morgan, UBS, and Goldman Sachs. This represents about 5% of the firm’s portfolio, a considerable increase from the 3.5% it had from four vehicles at the beginning of the year.

While Moreno started looking at Asian strategies, he is currently more bullish on the developed world, putting special emphasis on the US and Europe, as well as thematic strategies. As part of his investment strategy, Moreno likes to identify highly experienced partners in every region/theme him and his team consider investing in.

More than a type of investment, manager, or product, for him, it is about optimizing investments and achieving proper diversification in order to achieve the highest possible pension for its clients.

His investment process is composed of three stages:

1. Analyzing where in the world they want to go to
2. Which asset class to use
3. Whether to gain exposure actively or passively

Normally, for regions in which SURA relies on specialized managers, he expects to allocate between 30 and 40% of new investments to active managers.

Fees set for Afore SURA, and seven other Afores for 2022 are at 0.57%, according to the pension Fund Manager Regulator, CONSAR. This represents a 23 basis-point decrease over the 2021 average, and the largest reduction on record. Afore PENSIONISSSTE will be capped at 0.53%, and Afore Coppel needs to provide more information for CONSAR to approve its proposed fee.

According to Fund Pro Latin America, Afore Sura had USD 36.7 billion in assets under management as of the end of September 2021, of which about 15.1% was invested in cross-border products.